Nov 17, 2011 12:31pm
Re: more numbers - How about TIME Magazine • June 1933?
Where Is Our Ferdinand Pecora?
By Ron Chernow, Op-Ed Contributor
published January 5, 2009
BARACK OBAMA has assigned a top priority to financial reform when the new Congress assembles today. If history is any guide, legislators can perform a signal service by moving beyond the myriad details of the rescue plans to provide a coherent account of the origins of the current crisis. The moment calls for nothing less than a sweeping inquest into the twin housing and stock market crashes to create both the intellectual context and the political constituency for change.
For inspiration, Congress should turn to the electrifying hearings of the Senate Banking and Currency Committee, held in the waning months of the Hoover presidency and the early days of the New Deal. In historical shorthand, these hearings have taken their name from the committee counsel, Ferdinand Pecora, a former assistant district attorney from New York who, starting in January 1933, was chief counsel for the investigation. Under Pecora’s expert and often withering questioning, the Senate committee unearthed a secret financial history of the 1920s, demystifying the assorted frauds, scams and abuses that culminated in the 1929 crash.
The riveting confrontation between Pecora and the Wall Street grandees was so theatrically apt it might have been concocted by Hollywood. The combative Pecora was the perfect foil to the posh bankers who paraded before the microphones. Born in Sicily, the son of an immigrant cobbler, Pecora had campaigned for Teddy Roosevelt and been imbued with the crusading fervor of the Progressive Era. As a prosecutor in the 1920s, he had shut down more than 100 “bucket shops” — seamy, fly-by-night brokerage houses — and this had tutored him in the shady side of Wall Street.
With crinkly black hair and flashing eyes, Pecora was an earthy populist who appealed to Depression audiences. He was fond of playing pinochle and was often portrayed with a thick cigar clamped between his teeth. When he was hired for $255 per month by the Senate committee, Pecora was earning less money than most Wall Street mandarins disbursed weekly in pocket change.
Pecora was meticulous in preparation and legendary in stamina, mastering reams of material and staying up half the night before interrogations, aided by John T. Flynn, an Irish-American journalist, and Max Lowenthal, a Jewish lawyer. As Flynn wrote, “I looked with astonishment at this man who, through the intricate mazes of banking, syndicates, market deals, chicanery of all sorts, and in a field new to him, never forgot a name, never made an error in a figure, and never lost his temper.”
As Pecora relentlessly grilled the most famous names in finance, the nation relived the 1920s boom in a collective act of national remembrance. The hearings started in a modest committee room, but as the public was swept up in the drama, they shifted to a stately caucus room, illuminated by chandeliers and flashbulbs. As it gained momentum, the inquiry expanded until it shined a searchlight into every murky corner of Wall Street. Pecora exposed a stock market manipulated by speculators to the detriment of small investors who could suddenly attach names and faces to their losses.
Bankers had been demigods in the 1920s, their doings followed avidly, their market commentary quoted with reverence. They had inhabited a clubby world of chauffeured limousines and wood-paneled rooms, insulated from ordinary Americans. Now Pecora defrocked these high priests, making them seem small and shabby.
On Black Thursday of 1929, the nation had applauded a seemingly heroic attempt by major bankers, including Albert Wiggin of Chase and Charles Mitchell of National City, to stem the market decline. Pecora showed that Wiggin had actually shorted Chase shares during the crash, profiting from falling prices. He also revealed that Mitchell and top officers at National City had helped themselves to $2.4 million in interest-free loans from the bank’s coffers to ease them through the crash. National City, it turned out, had also palmed off bad loans to Latin American countries by packing them into securities and selling them to unsuspecting investors. By the time Pecora got through with the bankers, Senator Burton Wheeler of Montana was likening them to Al Capone and the public referred to them as “banksters,” rhyming with gangsters.
With a public aching for retribution, Pecora was playing with combustible chemicals, and Wall Street complained that he was destroying confidence. President Franklin Roosevelt retorted that the bankers “should have thought of that when they did the things that are being exposed now.” It was hard for Wall Street to mount a legitimate defense as Pecora pilloried them daily.
His prosecutorial methods grew questionable when he turned to the mysterious world of private banking, exemplified by the House of Morgan. In implacable style, Pecora badgered Morgan partners into admitting that they had paid no taxes for 1931 and 1932 — an incendiary revelation when the country was undertaking huge public works projects to combat unemployment. That the Morgan men had avoided taxes because of stock market losses was lost amid the hubbub.
No less inflammatory was exposure of Morgan’s “preferred list” by which the bank’s influential friends participated in stock offerings at steeply discounted rates. The renowned names on the list, including Calvin Coolidge, the former president, and Owen J. Roberts, a Supreme Court justice, shocked the nation with its unseemly association of money and power.
One Morgan partner, George Whitney, lamely explained that the intent was to safeguard small investors by preventing them from assuming such risk. To which Pecora responded tartly in his best-selling book, “Wall Street Under Oath,” “Many there were who would gladly have helped them share that appalling peril!” Such was the furor over the Morgan testimony that Senator Carter Glass of Virginia shook his head and sighed, “We are having a circus, and the only things lacking now are peanuts and colored lemonade.”
Seizing on the comment, a press agent for the Ringling Brothers Circus took advantage of a pause in the hearings to pop Lya Graf, a midget in a blue satin dress, on the lap of the portly and surprised J. P. Morgan Jr. The committee chairman, Senator Duncan Fletcher of Florida, pleaded with newspapers not to print the pictures, which only made them rush to do so.
The photo of Morgan with a circus midget planted on his lap became the signature shot of the hearings, emblematic of Wall Street’s fallen state. An embittered J. P. Morgan Jr. said Pecora had “the manners of a prosecuting attorney who is trying to convict a horse thief.”
Whatever their failings, the Pecora hearings laid the groundwork for financial reform legislation. By the time they ended in May 1934, they had generated 12,000 printed pages of testimony, collected in several thick volumes. These documents have served generations of historians. Our national narrative of stock market mayhem in the 1920s is largely composed of characters and anecdotes gleaned from their pages.
Pecora not only documented a litany of abuses, but also paved the way for remedial legislation. The Securities Act of 1933, the Glass-Steagall Act of 1933 and the Securities Exchange Act of 1934 — all addressed abuses exposed by Pecora. It was only poetic justice when Roosevelt tapped him as a commissioner of the newborn Securities and Exchange Commission.
Our current stock market slump and housing bust can seem like natural calamities without identifiable culprits, creating free-floating anger in the land. A public deeply disenchanted with our financial leadership is desperately searching for answers. The new Congress has a chance to lead the nation, step by step, through all the machinations that led to the present debacle and to shape wise legislation to prevent a recurrence. [end]
By Ron Chernow, NY Times Op-Ed Contributor - published January 5, 2009
Ron Chernow is the author of “The House of Morgan”.
Ron Chernow in The House of Morgan has written an epic study of the Morgan banking empire, from its origins in the nineteenth century through its diversification into three financial giants in the late twentieth century. Chernow’s book is a model of institutional history. He has mastered the vagaries of a multiheaded banking firm over the course of more than a century, without losing the thread of an engrossing story. Chernow brilliantly brings to life the men who made and staffed the Morgan empire. His work received the 1990 National Book Award for nonfiction.
• Financial Inquiries and the Pecora Legacy - May 6, 2009 | N.Y. Times | by Kate Phillips
Historical accounts of the Pecora hearings provide a reading experience that is as page-turning as a suspense novel. “The Pecora commission created villains essentially,” said Donald Ritchie, associate historian for the Senate. “This riveted the public because it was daily headlines for months." Pecora unmasked hidden bonuses and exorbitant salaries banking leaders had received; uncovered unpaid taxes and wrongdoing. (It was noted in some accounts that Time magazine coined the phrase “bankster” back then.)
• April 24, 2009 - Ferdinand Pecora discussion with Bill Moyers, Simon Johnson and Michael Perino.
Bill Moyers talks about the economy and Wall Street's future with Simon Johnson, former chief economist of the International Monetary Fund (IMF) and a professor at MIT Sloan School of Management, and Michael Perino, professor of law at St. John's University and an advisor to the Securities and Exchange Commission. Michael Perino has written an account of the 1933 Pecora hearings.
In the early 1930's, during the Great Depression, and under threat of subpoena, one tycoon after another, including J.P. Morgan Jr., was hauled before the Senate Banking Committee and grilled by Pecora, the committee's chief counsel. Ferdinand Pecora was a savvy immigrant from Sicily who became a Manhattan prosecutor. His memory for facts and figures proved to be the undoing of a Wall Street banking world gone berserk with greed and fraud.
Ferdinand Pecora is pictured on the cover of TIME Magazine in June 1933. "Wealth on Trial" reads the headline inside, where Pecora is described in ethnic stereotypes of the day as "The kinky-haired, olive-skinned, jut-jawed lawyer from Manhattan." To their shock, pompous financiers, unaccustomed to having their actions or integrity questioned by anyone, much less some pipsqueak legalist making $255 a month, were no match for his cross examination.
The revelations of the Pecora hearings and the public's anger led to sweeping reform, reining in the high-handed, free-wheeling banking industry. Those reforms stabilized our financial world for half a century, until the titans of finance and friendly politicians began to dismantle them.
• Simon Johnson, Michael Perino, and Bill Moyers discussion - April 24, 2009
watch | listen | read the transcript on-line
• Simon Johnson & Michael Perino profiles
Nov 18, 2011 7:18am
Re: more numbers - How about Climate Cranks posing as Skeptics?
Re: the paragraph you linked to from Time magazine, June 24, 1974.
I accept that you agree with the 2 or 3 percent who don't believe what 97 percent of The World's Scientists are saying about Global Warming and Climate Change. 97% of Climate Scientists today believe that man-made global-warming gases being emitted into our Earth's atmosphere are rapidly creating extreme weather events and disasters all around Our Planet.
Let's move on, look ahead, and try and imagine what's in store for our futures.
• You (and most of the 2 or 3 percent) call yourselves "climate skeptics
." This is a FALSE distinction. You're a climate crank
. We just examined, discussed, and exposed Climate Cranks in my new OWS movie item about the Tar Sands Keystone XL oil pipeline
. Please watch and listen to Tracks 8, 9, and 10.
The case for you being a climate crank
is made very strongly. Total running time for Tracks 8, 9, and 10 is about 21 minutes
Environmental journalist Mark Hertsgaard says, "[Here's] the problem. They [U.S. Senator James Inhofe, Fox News, U.S. Mainstream Media] are climate cranks. They like to be called "climate skeptics." And the media, I’m very sorry to say — the mainstream media, at least — calls them climate skeptics. They are not skeptics. Genuine skeptics are invaluable to science. That’s how science progresses, is with skepticism. But a true skeptic can be persuaded by evidence. They cannot. They have made up their minds for economic reasons or ideological reasons that they’re not going to believe in this. And because our country has allowed them to dominate the debate for 20 years, we’re now stuck with 50 more years of rising temperatures."
• IPCC chief braced for storms of denial over extreme weather report
by George Black - part of the Guardian Environment Network
guardian.co.uk, Friday 18 November 2011 04.53 EST
UN climate science panel chairman Rajendra Pachauri says he is ready for attacks from climate sceptics (Climate Cranks!) over the panel's new extreme weather report.
A major new report is due out today (Nov 18) from the Intergovernmental Panel on Climate Change that will link an increase in extreme weather events and disasters to global warming. A few days before its release, I had the chance to sit down with Dr. Rajendra Pachauri, chair of the IPCC -- the man the climate skeptics love to hate.
The report is, to put it mildly, well-timed, after this year's freakish sequence of extreme weather events, from the unprecedented heatwave and drought in Texas to the horrendous floods in Bangkok, which have left 562 dead at the last count. Pachauri said he was quite ready to face a fresh onslaught from deniers and skeptics -- particularly the inevitable scoffing that there was no proof that any of these incidents could be laid at the door of climate change.
It would probably be much like 2009 and early 2010, he said, when the skeptics threw a series of hand grenades at the IPCC -- unfortunately to great political effect. They focused mainly on a slip-up in the IPCC's usually meticulous review process in its fourth periodic assessment report, issued in 2007, the subject being the disappearance of the Himalayan glaciers. The report included an estimate that "if the present rate [of melting] continues, the likelihood of them disappearing by the year 2035 and perhaps sooner is very high (IPCC-speak for 90 percent-plus likely) if the earth keeps warming at the current rate." This prediction came from a 1999 magazine interview with India's leading glaciologist, Syad Iqbal Hasnain, not an article in a peer-reviewed journal.
So, yes, a small lapse, and within 24 hours the IPCC had acknowledged it. But how significant was the error? It happened that I had interviewed Hasnain in New Delhi in 2009; he told me that he had slightly modified his projections on the basis of new data compiled over the intervening decade. What he said now was, "If the current trends continue, within 30 to 40 years most of the glaciers will melt out." It was hard to be more precise, he said, because so much of the affected region in India, Pakistan, and Tibet is off-limits to researchers for national security reasons. So most of the glaciers are very likely to be gone by 2040 to 2050, rather than all the glaciers are very likely to be gone by 2035.
If I were one of the 1.5 billion Asians whose future survival depends on meltwater from the Himalayas, I'm not sure I'd grasp the fine distinction.
The second assault was on the integrity of Pachauri himself, accusing him of a conflict of interest as a paid consultant for the likes of Deutsche Bank -- which may be the single most enlightened financial institution in the world on the subject of climate change. Pachauri's fees, in fact, went straight to renewable energy projects, such as the provision of solar lanterns and fuel-efficient cookstoves to villages that lack electricity, run by the New Delhi-based not-for-profit organization he also heads -- the Energy and Resource Institute (TERI).
t had obviously been a harrowing experience, one of Pachauri's senior associates told me, but he never lost his Olympian calm or his warm collegiality, turning out every weekend as usual -- at the age of 70 -- to play for TERI's redoubtable cricket team.
In the long run, Pachauri told me the whole "Himalayagate" affair had only strengthened the IPCC. "The processes we follow are our biggest strength," he told me. "We took the initiative with the U.N. Secretary General to review those processes, and it was gratifying that the independent review found our work solid and robust. But look, we've been around for 23 years now. You change with the times. There's always room for refinement. We know we're under constant intense scrutiny, and we change with the times -- which I think is to our credit." The new report on extreme weather, he added, would be a good illustration of that process of constant refinement.
Of course, he said, it's in the nature of extreme weather that no single event, no single incident, can be linked directly to global warming. Recall the controversy over Hurricane Katrina. Pachauri wasn't able to comment on the specifics of the report pre-publication, but his underlying message was clear. "As we said in the 2007 assessment report," he told me, "floods, droughts, and heatwaves will all increase. We abide by that, and we hope the world accepts it. We can never link a specific event, but the aggregate analysis is totally sound."
Most of the world will accept it. Those who won't, won't, he said. "Some find us inconvenient. We will always be opposed by vested interests, and if people still want to attack us, there's nothing we can do about it." With that, he apologized for not being able to continue the conversation: he had to join an important conference call with the vice-chairs of the IPCC -- no doubt, his press officer said, to review some last-minute questions about the upcoming report. Pachauri rose to shake hands in farewell, Olympian calm intact.